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County Needs To Cut $5.7M In Spending

SNOW HILL – Several budget and financial topics came up at the Worcester County Commissioners meeting Tuesday morning, including the constant yield tax rate, legislative efforts to modify school funding requirements, and current county cash flow.

— A 4.7-percent reduction in Worcester County’s real property assessable base will cost the county several million dollars in tax revenue at current tax rates, staff reported this week.

The current real property tax rate is 70 cents per $100 of assessed value.

Worcester County, at the current tax rate, would lose $5,785,272 in real estate tax revenue for fiscal year 2011, compared to fiscal year 2010 tax revenues, as a result of declining property values.

To offset the $5.8 million real estate tax revenue drop, the County Commissioners would need to increase the tax rate to 73.5 cents per $100 of assessed value.

This rate, the constant yield tax rate, would generate the same amount of real estate tax revenue as last year if imposed.

In economically healthy years, the constant yield tax rate is lower than the current rate, as property values increase in those time periods.

The commissioners have repeatedly vowed to not raise taxes this year, saying that now is not the time to burden citizens with higher taxes.

Five of the seven sitting commissioners, who held office during the last election year, 2006, lowered the tax rate that year.

A hearing on the constant yield tax rate will be held May 4 during the public budget hearing at Snow Hill High School, which begins at 7 p.m.

— The decision by the Maryland General Assembly to pass on changes to the school funding Maintenance of Effort requirements continues a process widely believed to be weighted against waiver-requesting school systems.

State legislators also defeated an attempt to grant a blanket statewide Maintenance of Effort waiver for the upcoming fiscal year 2011.

“The only way to get a waiver is to be Montgomery County,” county attorney Sonny Bloxom quipped.

A new appeals procedure for waiver denials that was defeated means that counties must still appeal a denial to the Maryland State Board of Education, a body unsympathetic to waivers, Commissioner Judy Boggs noted.

Boggs called the decisions “very disappointing.”

Worcester County did not file for a Maintenance of Effort waiver this year. The waiver allows jurisdictions to lower the per-pupil funding for schools for the next fiscal year from the previous year. Only five of Maryland’s 24 school systems, including Wicomico and Dorchester County schools, asked to waive that requirement.

— Worcester County will tap into county reserve funds to bridge the gap between revenues and expenditures in June and July.

County Finance Officer Harold Higgins characterized the cash flow shortage as temporary. Money from the state and current revenue collection are taking longer to come in, according to staff.

Higgins received permission to tap into reserve funds from the commissioners Tuesday morning.

“It’s a short-term solution to a typical cash flow we’ve had the last couple years,” said Higgins.

“You never bring us good news lately,” joked County Commission President Bud Church.